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How technology can disrupt divide over government’s role

Reflections in the aftermath of a roads bill finally being passed and signed into law in Lansing:
Think about this: Roads are an example of what economists call “public goods,” things we all need, have access to and share. Other examples include national defense, (hopefully) good schools, local fire and police departments, clean air and water.

Who pays for public goods? Usually it’s government of one sort or another. And governments are paid for by our tax money. When Oliver Wendell Holmes, Jr., a justice of the U. S. Supreme Court, wrote in 1927 that “taxes are what we pay for civilized society,” he was suggesting that public goods are vital aspects of a civilized society and that they are usually provided by government, which in turn is funded by our tax money.

Now, we all know that Michigan roads are a mess. Our state spends less ‒ per person ‒ on road building and maintenance than any other state. All you have to do is drive over the border from Ohio or Indiana or drive around at break-up time in the spring to know it.

And bad roads cost money – more than the cost of fixing them. Potholes produce blown tires, bent rims, broken axles, misaligned front ends – all considerable expenses for the average driver. And traffic tie-ups caused by bad roads make us late to work and slow down the transport of goods and services.

Failing to fund our roads properly makes us all less well off, at least in terms of the public good we expect from good roads.

The road bill passed earlier this month by the legislature allocates $600 million from the state’s $9 billion general fund to pay for fixing our roads. Unless our economy grows at an unusually rapid rate over the next decade or so, those behind this road bill chose road repair at the expense of other public goods such as good schools, access to higher education, clean air and so forth.

That’s understandable, if not necessarily wise. One of the jobs politicians have is to balance competing priorities for the ways taxes are spent. Money is not infinite, so choices have to be made between various kinds of public goods that compete for support.

That’s quite a different issue than the big argument now dominating our politics: Republicans, by and large, think government is bad, much too big and too expensive, usually inefficient, often dysfunctional, something, in the famous words of Grover Norquist, to be strangled in the bath tub. Democrats argue that government is often the best solution to our problems and that all we need to do is spend more money to get better results.

As is usually the case, both extremes are wrong. Certainly, many government activities are too expensive and often not particularly effective. But that does not mean all government activities are bad. Nor does relying on government to perform a variety of functions mean we have surrendered our freedoms forever to the tender mercies of the “nanny state.”

Quite possibly the onrush of technology will make parts of the pro- versus anti-government argument moot, sterile and pointless.

Computer technology already makes it possible for citizens and consumers to interact directly with providers of goods or services in ways not previously possible. The fancy term for computer-based elimination of the middleman is “disintermediation,” which means individuals can enter into a transparent marketplace on their own.

Outfits like Uber make it possible for people to arrange urban transport without having to go through local monopolistic taxi companies. Airbnb puts travelers into direct contact with people wishing to rent a spare bedroom without having to rely on the intermediary of a hotel. Computer-based crowdfunding makes it possible for entrepreneurs to pull together capital to fund startups without having to rely on intermediary investment banks.

Ordinary citizens now trapped in the political classes’ endless and mindless pro- and anti-government arguments may suddenly be able to escape from that sterile maze, thanks to technology.
It isn’t yet clear how this can help fix the roads.

But it is clear that ideology may have scant appeal to people – normal, ordinary human beings who want and need public goods, and who suddenly can find new ways to get them at an affordable cost and with an efficiency that is far too rare in today’s polarized world.

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Comments

Martha Toth

Tue, 11/17/2015 - 10:20am

Huh? I've really tried, Phil, but I cannot see your point. HOW is technology going to give us police, fire service, education, roads?
Speaking just for education, the learning-anywhere-anytime mantra has not ushered in a new era of efficiency. Instead, it has mired college students in debt and K-12 students in failure, while vastly enriching the entrepreneurial vultures who sell services they cannot or will not provide.

My impression is that this proposal was not designed to solve every problem or fix every need. Just a start with respect to some problems and some needs agree that the 'on-line' learning-for-profit schemes are on a par with the TV ads promoting expensive prescription drugs. Both need to be avoided.

I am sorry to bring a little cloudiness to Mr. Power's hopes.
I notice that none of Mr. Power's examples of how technology has change things were government entities. It seems that if anything his examples has government organizations placing limits or even denying the public access to those changes.
I wonder encourage Mr. Power to step back and consider those organizations that are having the greatest impact with technology and look to how they have had o change their approach to how they operate. He might find that effectiveness has much to do with approach, those principles that guide the organizations. Those organizations that are over a hundred years old see how their clients have changed and how they serve them must change.
Before Mr. Power's hopes can be realized the agencies that serve their communities must recognize that those they serve have changed and they must change to be percieved as part of the changing world. Because with our such philisophical change they will resist all changes and will not effectively implement any new means or methods available to them.
Mr. Power can have his hopes, but I wonder if he can accept the changes that the public is needing from government, I wonder if he recongizes that we are in the 40s, 50s, 60s, 70s, even 80s culture any more.
It can be a height threshold to step over in how one thinks and sees things, but we are a dynamic world, especially the American culture, and that demands we most change to be an effective part of it.

"The road bill passed earlier this month by the legislature allocates $600 million from the state’s $9 billion general fund to pay for fixing our roads. Unless our economy grows at an unusually rapid rate over the next decade or so, those behind this road bill chose road repair at the expense of other public goods such as good schools, access to higher education, clean air and so forth."
Mr. Power?
Aside from directly citing from MDP speaking points, exactly what are you basing this gloom-and-doom prognostication on?
The HFA (go to page 2) and SFA (go to page 9) estimates do not back up your argument. And for the record; these are separate entities.
I look forward to your response.

Mr. Power says, "The road bill passed earlier this month by the legislature allocates $600 million from the state’s $9 billion general fund to pay for fixing our roads." That is just not the case. The bill does not allocate $600 million from the general fund until fiscal year 2021 when the general fund should be sufficiently larger to easily accommodate that transfer. Mr. Power also says, "Unless our economy grows at an unusually rapid rate over the next decade or so, those behind this road bill chose road repair at the expense of other public goods such as good schools, access to higher education, clean air and so forth." The estimated general fund for fiscal year 2014/2015 was $9,724.9 billion. To accommodate the $600 million transfer in 2021, the general fund would have to grow by 6.2%. Over the five year period between 2009/2010 and 2014/2015, the general fund grew by 26.6%.
He is absolutely right when he says that more of one public good is purchased at the expense of other public goods; that is necessarily always the case. But the transfer will not require cutting funds allocated to other public goods; it will just reduce increases for other public goods. That is a far different situation.

Using FY's 2009-10 through to 2014-15 to forecast GF growth to 2021 is to rely on extremely atypical base years . . . a period drastically skewed by the recovery period following the great recession.! Scary.
Walt